Implementation of Limits on the Acceptance of Performance Bonds

In order to strengthen our Risk Management framework and limit our exposure to concentration risk, LCH.Clearnet Ltd will be imposing a limit on the overall value of performance bonds that can be provided as margin cover from each performance bond issuer.

For all new performance bond issuance, the maximum amount that a single issuer can provide for a single clearing member is limited to £50mn (or equivalent in other currencies).

Any member who has a performance bond(s) from a single issuer with a value greater than £50mn (or equivalent in other currencies) lodged as collateral at present will need to replace the amount over £50mn with alternative collateral by the end of November 2009.

We have spoken to all banks and clearing members involved but if you need any further information please contact us.

Jenny Cronin – Treasury Operations
Tel:  +44 (20) 7426 7095 
E-mail:  jenny.cronin@lchclearnet.com

or

Lucy Hammond – Risk Management
Tel: +44 (20) 7426 7173
E-mail: lucy.hammond@lchclearnet.com.